Duke Energy To Appeal Fine By NC Environmental Regulators

Duke Energy To Appeal Fine By NC Environmental Regulators

CHARLOTTE, N.C. - Duke Energy announced March 24th, it will vigorously contest an unprecedented civil penalty issued by North Carolina environmental regulators related to the L.V. Sutton Steam Electric Plant in Wilmington. On March 10, 2015, the North Carolina Department of Environment and Natural Resources (NC DENR) fined Duke Energy $25.1 million for groundwater violations at the Wilmington facility.“This is a difficult step, but we cannot allow this level of regulatory overreach to go unchallenged,” said Paul Newton, state president – North Carolina. “The actions by NC DENR send a chilling message to the North Carolina business community.”The company will file a formal appeal with the North Carolina Office of Administrative Hearings by April 9 demonstrating the specific instances where it believes NC DENR acted contrary to law, exceeded its authority or jurisdiction, and didn’t follow proper rules and procedures.“We take very seriously our responsibility to care for the communities around our facilities. That’s why we monitored groundwater at the Sutton plant, routinely shared data with the state, and voluntarily acted to ensure local residents continue to have a high-quality water supply,” said Newton. “Our work has been proactive and focused on the well-being of the community. We took accountability and addressed the issue at Sutton ourselves. “We are as committed as ever to closing ash basins in ways that protect groundwater. We will continue to advance those plans while we sort through this separate legal issue,” said Newton.

Caring for the Flemington communityIn 2013, monitoring data indicated that groundwater near the Sutton plant was starting to move in the direction of the Flemington community, which gets its water from Cape Fear Public Utility Authority (CFPUA) wells near the plant.The water supply is safe and continues to meet federal and state drinking water standards, with a margin of safety, and there is no health risk to the residents.To ensure it remains that way, Duke Energy initiated a partnership with CFPUA to fund the extension of a municipal water line to the area, eliminating the need for public drinking wells. That project will be completed in less than two years, well before groundwater impacts would reach the public water supply.

Company awaits state approvals to begin ash basin closureThe company will close 32 ash basins across North Carolina, and has been working hard on plans to execute these closures. The work will begin at four facilities: Asheville, Dan River, Riverbend, and Sutton. Ash can only be removed from the basins after the state issues new wastewater permits, for which the company applied in 2014. The first three of these permits are expected in early summer, with the rest of them following in late summer and fall. “We are doing all we know to work constructively with NC DENR to meet North Carolina’s aggressive deadlines to close ash basins,” said Newton. “It is essential the state move quickly to support this important work.”More information on Duke Energy’s coal ash management can be found at http://www.duke-energy.com/ash-management/

About Duke EnergyHeadquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at http://duke-energy.com

History of the Fine and State's PositionOn March 10th, the N.C. Department of Environment and Natural Resources issued Duke Energy Progress the state’s largest-ever penalty for environmental damages, fining the utility $25.1 million for groundwater contamination from coal ash at the Sutton Plant near Wilmington.DENR fined the utility $25,116,883.61 based on the extent of impacts to groundwater, the characteristics of the constituents causing the impacts and the duration of the violations. The calculation for the fine incorporated the state’s investigative costs and a formula taken from state groundwater laws that allows fines to be assessed by multiplying the number of days an individual contaminant leached into groundwater by a civil penalty for each violation. State groundwater violations at other Duke Energy facilities could result in additional fines against the utility.Under the North Carolina constitution, proceeds from Tuesday’s fine will go to a statewide fund for public schools.“Today’s enforcement action continues the aggressive approach this administration has taken on coal ash,” said DENR Secretary Donald R. van der Vaart. “In addition to holding the utility accountable for past contamination we have found across the state, we are also moving expeditiously to remove the threat to our waterways and groundwater from coal ash ponds statewide.”At Sutton, the state agency determined that Duke Energy allowed a host of coal ash contaminants to leach into the groundwater at the facility for several years, in at least a few cases. To determine the civil penalty, state officials used data from water samples of monitoring wells at the facility’s compliance boundaries and multiplied the number of days each individual contaminant leached into groundwater.In the case of the thallium, for instance, state officials determined that Duke allowed the pollutant to leach into groundwater at the Sutton facility for 1,668 days. State officials multiplied 1,668 by a civil penalty allowed by law of $5,000 per day. The result was a fine of $8,340,000 for thallium alone. Pollutants that are considered a greater public health risk, including thallium, selenium, arsenic and boron, carried heavier penalties than other pollutants, state officials said. The state’s investigative costs totaled $8,883.61.The fine was issued by a “Findings and Decisions and Assessment of Civil Penalties” to Duke Energy Progress from Jay Zimmerman, director of the N.C. Division of Water Resources. Under state law, Duke Energy has 30 days to respond to the fine and may choose to appeal it to the N.C. Office of Administrative Hearings. Copies of the “Findings and Decisions” document and related documents can be found on DENR’s website at: http://portal.ncdenr.org/web/guest/duke-coal-ash-facilitiesOther large penalties DENR has issued in the pastBefore the Mrach 10th action, DENR’s largest penalties for environmental violations were a $5.6 million fine the Division of Air Quality issued in 1986 to Texas Gulf (now PCS Phosphate) in Aurora, a $1.4 million fine DAQ issued in 1991 to Weyerhaeuser in Craven County, and a $1 million fine DAQ issued in 1994 to Steelcase in Henderson County. DENR’s other largest fines include the then-Division of Water quality’s $729,000.00 fine against International Paper in 1984, the Division of Waste Management’s fine in 1990 of $598,900 to Porcelanite Tile, the DWM’s fine in 1994 of $589,999 to Akzonobel Surface Chemist, and the DWM’s fine in 2007 of $553,225 to Environmental Quality in Apex.

Sutton historyThe Sutton Plant began operation as a coal-fired electric generating station in 1954. The three coal units were retired in 2013 as a new natural gas-fired unit came online at the site.In August 2014, DENR sent Duke Energy Progress a notice of violation and intent to enforce for Sutton, calling it “the legally required first step toward issuing the utility a fine for violations of the state’s groundwater contamination laws.”That action followed the filing in 2013 of lawsuits that focused on stopping the violations at Duke Energy’s coal ash ponds.The March 10th action marks the second time in recent months that DENR has reversed decisions made under previous administrations to protect the environment in the Wilmington area. In November 2014, DENR reclassified Sutton Lake as a public resource instead of an industrial cooling pond. The lake, which receives coal ash wastewater discharges from the Sutton plant ash ponds, is now considered to be “waters of the state,” a classification that means the lake will be protected by more stringent water quality standards.The reclassification followed a document review during which records were found indicating that while the water body met the legal definition for waters of the state, previous department leadership decided to disregard that determination. The lake reclassification also prompted a change in the state’s hazard classification for two dams that are part of the coal ash impoundments at the facility. As a result of the reclassification, the state agency gave Duke Energy 60 days’ notice that its wastewater discharge permit would be reopened. The reclassification may mean additional treatment conditions are placed in the discharge permit or other environmental permits will be required in the future to ensure the health of the lake.

Other fines possibleIn addition to the penalties for violating state groundwater standards, penalties for violations of the utility’s federal Clean Water Act permit will be addressed through an enforcement agreement DENR has established with the Environmental Protection Agency.

Closing the coal ash pondsIn September 2014, the Coal Ash Management Act became law, putting the state on a path to closing all the utility’s coal ash ponds. Then in December 2014 the EPA published federal regulations on coal ash that, although largely weaker than North Carolina’s Coal Ash Management Act, reinforce the responsibility of impoundment owners.Sources: Duke Energy and NC Department of Environment and Natural Resources.